SHORT-RUN PRICING STRATEGIES TO INCREASE CORPORATE AVERAGE FUEL ECONOMY

Since 1974 the average fuel economy of new cars has doubled from fourteen to twenty-eight miles per gallon. Shifts in sales to more fuel efficient models within a product line accounted for little of the improvement. This paper explores the use of pricing strategies to shift sales to achieve a legislated fuel economy target. A multinomial logit model is used to compute surcharges and rebates that leave consumer satisfaction unchanged yet increase the sales-weighted average fuel economy. The results suggest pricing strategies are efficient for small improvements in fuel economy, but are expensive for large improvements.     

Consumer Preferences and Demand for Annuities: Evidence From Hong Kong

Retirees without annuities in Hong Kong confront longevity and investment risks. Despite these risks, there is very limited uptake of annuities. This study identifies product and consumer characteristics that are associated with the demand for annuities in Hong Kong. We conduct a discrete choice experiment and distribute a consumer survey among two independent representative samples of workers aged between 40 and 64. Results suggest that a fixed monthly income and a 10-year guarantee period are two significant product characteristics, while a bequest motive, being married, and an understanding of the annuity are consumer characteristics that are associated with the demand for annuities. Being presented the optimal hypothetical annuity product, approximately one-third of middle-aged workers choose to annuitize their retirement savings. The findings and methods of this study can be applied for designing annuity products in other contexts.     

Issues of quality and consumer rights in the health care market

This Issue Brief describes how the structure of the health care market has changed in the recent years. It outlines the growth in managed care and the changes in the types of managed care plans available. In addition, it discusses the issue of quality in the health care market. It also includes an overview of the legislative topics and issues relating to quality and consumer rights that policymakers are currently considering. Growth in national health expenditures, the medical care price index, and employer health care costs has slowed significantly since 1990. This decreased growth has coincided with substantial increases in managed care plan enrollment. The percentage of employees enrolled in managed care plans increased from 48 percent to 85 percent from 1992 to 1997. Quality is a multidimensional concept. Although individuals may agree on its components, they may disagree on the relative importance of these components. Therefore, disagreement exists not only on how to measure quality but also on how it is defined. Consequently, policy decisions need to be based on an evaluation of a particular law's effect as opposed to its stated goal or intent. This distinction is important because a law that addresses access or consumer rights does not necessarily address the quality of care a consumer receives. Ultimately, whether an individual believes that a law truly addresses quality will depend in a large part on his or her subjective opinion of what quality entails. To date, comparison of the quality of managed care plans with that of fee-for-service plans has not produced results that uniformly differentiate between these two plan types in either a positive or a negative way. In addition, it is important to note that the current debate on the quality of care provided in the health care market is not new to the present managed care era. The regulations and mandates discussed in this report would not guarantee increased quality in the health care market, unless quality is defined as easier access for those with health insurance. However, if quality is defined as the success of the outcomes of health services provided, the effect of these regulations on quality is in need of further research. Yet, the regulations would have some impact on the costs of health benefits and insurance. This impact has been estimated to be relatively small to substantial, depending on the interpretation of the mandates and assumptions derived from that interpretation. Regardless of the magnitude of the estimated increases, some research has shown that these regulations could have serious implications for the likelihood of small businesses offering health benefits. While these health plan regulations effect on quality depends on one's definition of quality, costs would increase regardless of the definition one uses. Consequently, these regulations would come at a price. Thus, legislators must decide between: (a) imposing regulation that would increase access and consumer "rights" for those with insurance but would be of questionable value to the quality of outcomes, and (b) allowing existing market forces to improve quality through experimentation and competitive forces.     

THE INCENTIVES FOR RESALE PRICE MAINTENANCE UNDER IMPERFECT INFORMATION

This paper considers both the incentives for and the welfare effects of resale price maintenance (RPM) in retail markets characterized by imperfect consumer information. In markets where point-of-sale information on the product is essential for sales and information on prices is costly, RPM permits manufacturers with some monopoly power to resolve two incentive conflicts with retailers. First, because retailers with price-setting powers do not appropriate the gains in profit to an upstream manufacturer from actions taken to increase demand, their incentives to inform consumers of the product and to set low prices are inadequate. This purely vertical externality results in the classic "double mark-up" of final prices. Second, when consumers' costs of price search vary, stores offering low prices and no information can exist in the market equilibrium. These discount houses free-ride on the informational services of high-price informing retail outlets — a horizontal externality. In the imperfect information setting of this paper, (1) administered pricing improves monopolists' profits by resolving the incentive conflict; (2) the profitable use of a price floor reduces the maximum retail price charged and may reduce the average retail price; (3) price floors or administered prices can be Pareto-improving and more likely welfare (surplus)-improving; (4) price floors are welfare-improving.     

The poverty of the Czech elderly--myth or reality?

"Poverty among the Czech elderly is considered from two perspectives: objective and subjective. Various indicators of objective poverty are analysed, such as the relation of average monthly income to average old-age pension, pension inequalities, the structure of household expenditures, and the structure of consumer durables ownership, as are representative survey data measuring subjective poverty. It is concluded that from the objective point of view the Czech elderly are as a whole well above subsistence poverty. However, their subjective poverty seems quite far-reaching, affecting between 30 and 50 percent."     

A behavioral model of the demand for consumer durables

It is argued that models of the demand for consumer durables would be strengthened by the introduction of a behavioral element reflecting the nature of the decision making process within the individual household. A possible behavioural model is described. It is suggested that this would consist of the following elements: general economic confidence of the consumer (derived from personal expectations and attitudes to the general economic situation): general durable purchasing orientation (including willingness to devote resources to durable purchasesand house moving expectations); specific product choice considerations (including orders of acquisition of new durables: the implicit depreciation of existing equipment; perceptions of the characteristics of new products; purchase expectations). Such a model is more extensive than that normally described by others working in this field. The interaction between the different variables is discussed. It is shown that all these elements can be estimated through regular surveys and so the model can be made operational for forecasting purposes. However, it needs to be recognised that there are also unexpected even as which will affect the outcome in individual circumstances and the nature of these is also considered.     

The Prospects for Digital Radio

Digital audio broadcasting is a major innovation in radio, one that is at its most advanced in Europe. It has the potential to deliver high-quality audio reception and to increase significantly the capacity of the radio spectrum, with the possibility of an expansion of both the range and diversity of radio programming. Nevertheless, in the UK and elsewhere it remains relatively unknown and under-adopted in comparison with other consumer technologies like digital television. This article examines the origins of digital radio, and considers how this technology is expected to become a mass communications technology, eventually supplanting analogue radio. However, in its present form, there is little that is novel currently being offered on digital radio, and the economic and political contexts in which it is being developed may encourage further concentration of ownership and reduce diversity of choice in listening. Unlike previous innovations then, such as FM broadcasting, there appear to be few compelling advantages of digital radio that will persuade listeners to adopt this new technology. If this new technological system is to succeed, alternative uses must be found for it, and one area for which it might be suited is mobile data communications. The article concludes by suggesting that this might mean that radio becomes of secondary importance to this potentially lucrative application of digital audio broadcasting technology.     

The male/female earnings gap and female self-employment

This paper examines the gender differences in the choice to become self-employed. Of particular interest is the relationship between the male/female earnings gap in wage and self-employment, and the male/female differences in the average predicted probability of self-employment. It has been argued that earnings inequality in wage-employment lead women to choose self-employment. However, it may be the case that inequality in the form of consumer discrimination causes an earnings gap between males and females in self-employment. If inequality is higher in self-employment than in wage-employment, then there would be females in wage-employment who would be in self-employment in the absence of inequality in both sectors.     

CROSS-BORDER ACQUISITIONS AND BOARD GLOBALIZATION IN THE WORLD'S LARGEST TNCS, 1995–2005

Because of their size, power, and undemocratic nature, the cross-border activities of the world's transnational corporations (TNCs) are of particular interest to sociologists. Previous research shows that over the past decade the boards of directors of the world's largest TNCs have become more multinational, in other words are increasingly composed of individuals from different countries. During the same period there was also a dramatic increase in the number of cross-border TNC mergers and acquisitions (M&As). Anecdotal evidence suggests a connection between cross-border acquisitions and the increasingly multinational composition of TNC boards, and this study explores that relationship using data on the 148 largest TNCs and commercial banks. We find that a cross-border acquisition almost always results in a more multinational board of directors, that multinational boards are more likely to do cross-border deals, and that once a board becomes multinational it stays that way. The evidence also shows that multinational boards are concentrated in Europe, suggesting another dynamic between the integrating forces of the European Union and its TNCs. Because the results show increasing cross-national contact between the corporate elites who serve on multinational TNC boards, the results also provide some support for claims about the recent emergence of a "Transnational Business Class" or "Transnational Capitalist Class," at least in Europe, although it is recognized that more study is needed to make the case that such a class is forming.     

Differences in Factors Attracting Consumers to Taiwan's Supermarkets and Traditional Wet Markets

Exit interviews were used to summarize factors attracting consumers to six supermarkets and three wet markets in a representative city. Using the history of the marketplace as the foundation for analysis, the strengths and weaknesses of the two retail formats are introduced and are compared to the consumer response data. Findings indicate that the decline of Taiwan's traditional markets will probably continue until all are replaced by new retail formats. Currently, the traditional market is in the weakest of all the retail positions since it supplies the needs of a shrinking population of older consumers with preferences and shopping behaviors unlike those of younger, nontraditional consumers. Supermarket expansion is slowing because new hypermarkets, convenience stores, and warehouse stores are competing to satisfy the needs of the younger, more mobile target population. Overall, store formats that provide lower prices, sales promotions, a good environment, good product quality, and good service have the greatest opportunity to build consumer loyalty and increase market share.     

Enabling informed consumer choice in the long-term care insurance market.

Provisions in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) may increase private long-term care insurance sales without imposing substantially more stringent consumer-protection features. The ability of consumers to make informed choices when purchasing this complex product is examined in light of these changes. Data were collected through detailed examinations of policies and interviews with industry experts, insurance companies, agents, consumer groups, and regulators. Because of the complexity of this product, the goals of expanding, consumer choice and ensuring that consumers are able to make informed decisions often work against each other. Mechanisms are discussed through which the government can facilitate informed choice and improve consumer protection. The authors contend that, because the government is providing tax incentives that encourage consumers to purchase the product, it has the responsibility to ensure that consumers understand the long-term care insurance they purchase.     

Implications of ERISA for health benefits and the number of self-funded ERISA plans

This Issue Brief provides an overview of the issues relating to the Employee Retirement Income Security Act of 1974 (ERISA) and health benefit plans, the major case law relating to ERISA and health plans, and the implications of the preemption of state regulations for health plan sponsors and participants. It also presents the latest data on the number of health plan participants in self-funded ERISA plans. Finally, it presents a summary of current legislative proposals that would attempt to amend ERISA. Under the framework ERISA established for employee benefit plans, the regulation of employment-based health benefit plans has evolved into a two-tiered system in which both federal and state laws play important roles. The Supreme Court has interpreted ERISA's "savings" and "deemer" clauses to mean that insured plans are subject to regulations directly at the federal level and indirectly at the state level, while self-funded plans are regulated exclusively at the federal level. The ERISA statute and the courts' interpretations of the Act have created a sharp controversy over how employee health benefit plans are provided and administered, with state regulators and consumer advocates on one side of the debate and plan sponsors (e.g., employers and unions) on the other. State regulators and consumer advocates tend to favor more regulation, and in many instances greater regulation at the state level, which they argue would provide more protections for consumers. However, employers and unions (or any plan sponsors) think ERISA preemption is very important to their ability to provide innovative and cost-effective health benefits for their employees, and assert that ERISA's present structure should be preserved. The U.S. General Accounting Office (GAO) found that 44 million individuals (39 percent of those in ERISA plans) were enrolled in self-funded ERISA plans in 1993, up from 39 million (33 percent of those in ERISA plans) in 1989. The Employee Benefit Research Institute (EBRI), using the same methodology as GAO with 1995 data, estimated that 48 million individuals (39 percent of those in ERISA plans) were enrolled in self-funded ERISA plans in 1995. When policymakers look to amend ERISA, they should consider whether the change to ERISA will produce a higher level of quality for consumers than is being provided under the present system and will continue to do so in the future. Policymakers must also decide whether quality of care is better enhanced by health plans' greater exposure to liability or by market forces. If policymakers decide that increased exposure to liability is the route to go, will consumers be able to enjoy any potential improvement in quality or will more individuals end up uninsured because of increased costs and not be able to get any care regardless of the quality?     

Fortune,Risk, and Remittances: An Application of Option Theory to Participation in Village‐Based Migration Networks1

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Medicalization and the Market Economy: Constructing Cosmetic Surgery as Consumable Health Care

Throughout the last decade, cosmetic surgery has been a steadily growing industry. According to the American Society of Plastic Surgeons, in 2007, consumers spent 12.4 billion dollars on both surgical and minimally-invasive cosmetic procedures. This article draws upon in-depth interviews with individuals who have had cosmetic surgery, specifically focusing on how they construct and articulate their experiences in economic terms. Findings suggest that individuals characterize cosmetic surgery as a preventative or health-maintenance practice and often weigh the potential costs of surgery against other consumable goods they may wish to purchase. Additionally, there tends to be recognition that the services purchased are luxury items that are evaluated along the lines of cost and quality, supporting prior assertions that cosmetic surgery as a practice and an industry is qualitatively different from more traditional modes of health care. Finally, this article explores how the interaction between patient and physician, particularly from the patient's perspective, is increasingly transformed into an exchange between a consumer and service-provider.     

Values,Morals, and Religion in the Social Studies

Methods for facilitating students' standards-based consumer literacy are addressed via the use of problem solving with food and product labels. Fifth graders will be able to: (1) provide detailed analysis of food and product labels; (2) understand large themes, including production, distribution, and consumption; and (3) explore consumer decision-making skills.     

Metanorms and antisocial punishment

Contributions to public goods benefit all group members, yet research shows that generous group members are sometimes punished. We argue that when such antisocial punishment efforts are public, the consistency of group member contributions will encourage individuals to punish atypically generous group members. Similarly, when behavior of group members is consistent, the publicness of punishment will increase antisocial punishment. Both of these effects will be weaker for individuals who are interested in getting to know the generous deviant. We test our hypotheses in a public goods experiment and find support. Our findings contribute to the norms literature, in particular, to understanding of antisocial punishment.     

Influence of human population size and the built environment on avian assemblages in urban green spaces

While studies of how habitat patch dynamics structures avian communities in urban environments has received some attention, there is considerably less known of how the built environment and human population size may influence the structuring of urban bird communities. We investigated bird populations in Pittsburgh, Pennsylvania (U.S.A.) through replicated point count surveys of breeding birds in 50 parks and cemeteries of varying sizes. We counted 4,435 individual birds in 441 counts. Of the 61 species detected, 27 were rare (detected at <8 points). Migratory species accounted for 46.1 % of all individuals, while 23.2 % of all individuals were of introduced species. Species richness increased significantly with green area size, as did the number of rare species. Species diversity decreased significantly with an increase in the proportion of individuals of introduced species; in particular, cavity nesters were less abundant when introduced species were present. Elements of the built urban environment including commercial development and transportation corridors were associated with significant reductions in park-wide species richness, mean number of species per point, and mean number of individual birds recorded per point. Human population size was positively related to increased numbers of individuals of introduced species, but a lower mean number of species per point. Ours is among the first to identify specific relationships between avian population characteristics and human population size, as few other studies have specifically incorporated human population size into a local, fine grain study design. Our data suggest that human population size is an important parameter that can be measured independently of characteristics of the built environment and the physical characteristics of the park itself as a correlate of avian diversity and abundance. Our study points to a variety of trade-offs needed to manage habitat for birds in urban settings.     

Enabling Informed Consumer Choice in the Long-Term Care Insurance Market

ABSTRACT

Provisions in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) may increase private long-term care insurance sales without imposing substantially more stringent consumer-protection features. The ability of consumers to make informed choices when purchasing this complex product is examined in light of these changes. Data were collected through detailed examinations of policies and interviews with industry experts, insurance companies, agents, consumer groups, and regulators. Because of the complexity of this product, the goals of expanding consumer choice and ensuring that consumers are able to make informed decisions often work against each other. Mechanisms are discussed through which the government can facilitate informed choice and improve consumer protection. The authors contend that, because the government is providing tax incentives that encourage consumers to purchase the product, it has the responsibility to ensure that consumers understand the long-term care insurance they purchase.     

MEASURING THE WELFARE GAIN FROM PERSONAL COMPUTERS

The welfare gain to consumers from the introduction of personal computers (PCs) is estimated. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good will not be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of PCs is 2%–3% of consumption expenditure. (JEL E01, E21, O33, O47)     

Health savings accounts and health reimbursement arrangements: assets, account balances, and rollovers, 2006-2011

ASSET LEVELS GROWING: In 2011, there was $12.4 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 8.4 million accounts, according to data from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, sponsored by EBRI and Matthew Greenwald & Associates. This is up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2010, when 5.4 million accounts held $7.3 billion in assets. AFTER LEVELING OFF, AVERAGE ACCOUNT BALANCES INCREASED: After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011. In 2006, account balances averaged $696. They increased to $1,320 in 2007, a 90 percent increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively. In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. In 2011, average account balances increased to $1,470, a 9 percent increase from 2010. TOTAL AND AVERAGE ROLLOVERS INCREASE: After declining to $1,029 in 2010, average rollover amounts increased to $1,208 in 2011. Total assets being rolled over increased as well: $6.7 billion was rolled over in 2011, up from $3.7 billion in 2010. The percentage of individuals without a rollover remained at 13 percent in 2011. HEALTHY BEHAVIOR DOES NOT MEAN HIGHER ACCOUNT BALANCES AND HIGHER ROLLOVERS: Individuals who smoke have more money in their accounts than those who do not smoke. In contrast, obese individuals have less money in their account than the nonobese. There is very little difference in account balances by level of exercise. Very small differences were found in account balances and rollover amounts between individuals who used cost or quality information, compared with those who did not use such information. However, next to no relationship was found between either account balance or rollover amounts and various cost-conscious behaviors. When a difference was found, those exhibiting the cost-conscious behavior were found to have lower account balances and rollover amounts. DIFFERENCES IN ACCOUNT BALANCES: Men have higher account balances than women, older individuals have higher account balances than younger ones, account balances increase with household income, and education has a significant impact on account balances independent of income and other variables. DIFFERENCES IN ROLLOVER AMOUNTS: Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals. Rollover amounts increase with household income and education, and individuals with single coverage rolled over a slightly higher amount than those with family coverage.